Trouble in the Top End

TIPPERARY station had it all: a zoo with 1800 animals (including a pygmy hippopotamus), an indoor equestrian centre and guest accommodation that would make the most lavish resorts envious. Billionaire Warren Anderson also had plans to run 200,000 head of cattle for the live export trade on his Northern Territory property, but the dream, like his fortunes, evaporated and he sold up in 2003.

These days, Tipperary is still a substantial station with 70,000 cattle and is now run by David Warriner, the president of the Northern Territory Cattlemen's Association.

But while Tipperary survived, northern Australia's cattle industry is facing a bleak future because Indonesia, the major market for Australia's live cattle exports, is drastically reducing the number of animals it imports every year as it aims to make itself 90 per cent self-sufficient in beef by 2014.

The country's slashing of import quotas to 283,000 cattle in 2012, down from 414,000 last year and 773,000 in 2009, has left hundreds of cattle producers in northern Australia struggling and facing an uncertain future. The trade is critical because Indonesia takes more than 60 per cent of Australia's cattle exports. (The industry estimates it will export 570,000 cattle to all markets this year.)

According to government figures, more than 320 jobs have already been lost in the region and hundreds of thousands of animals are languishing in Australian feedlots and on cattle stations from Townsville to Port Hedland.

In the NT there 120 properties that rely almost entirely on live exports, directly employing 1000 people on the stations, with just under a quarter of staff being indigenous. Indeed, indigenous-owned lands also run around 100,000 head of breeding cattle.

Luke Bowen, the chief executive of the NT Cattlemen's Association, says cattle producers are being crippled by high debt, and low cash flows. Meanwhile, property values are also dropping. Bowen says there are at least 5000 people in allied industries who depend on the cattle trade. And there are also whole communities that serve workers on the cattle stations.

''People are going quiet, because they have some financial challenges. People are really doing it tough,'' Bowen says.

Trouble for the Top End producers began last May when the ABC's Four Corners program screened A Bloody Business, which revealed terrible cruelty to Australian cattle in Indonesian abattoirs. After a major public outcry, Agriculture Minister Joe Ludwig suspended trade between the two countries and introduced tough new animal welfare tracking systems throughout exporters' supply chains.

Cattle producers, while strongly critical of the treatment of Australian cattle in Indonesia as shown in the program, were highly critical of the Gillard government's handling of the ensuing crisis, especially its talks with Indonesia.

''It [the suspension] was badly handled going into it, it was badly handled during it, and probably been badly handled since,'' Warriner says.

Warriner and other producers believe the Australian government introduced the ban on live cattle exports too hastily and without sufficient consultation with Indonesia. Initially, only the dozen abattoirs identified on Four Corners were banned from the trade, but following the public outcry and pressure from within the Labor Party, Senator Ludwig announced a full suspension.

The opposition has frequently used the live export saga as another example of Labor incompetence.

Warriner says without a concerted effort to open up the Indonesian market, producers will be forced out of business.

''We aren't a charity, we will become insolvent.''

For Australian cattle producers, Indonesia's self-sufficiency ambitions first affected profits when Indonesia imposed a 350-kilogram weight limit on export cattle. This move allowed the Indonesian industry to make money by fattening cattle on their feedlots before selling them for slaughter.

The new rules require Australian exporters to guarantee animal welfare standards (millions of sheep are sent to the Middle East every year) from farm to slaughter, with an independent audit of the supply chain to be supplied to the Department of Agriculture.

The rules, now cover 75 per cent of export markets, and apply to 99 per cent from September 1.

Warriner endorses the new rules and says the industry has done all it can to patch up the relationship. Exporters have invested heavily in new equipment, infrastructure, and training for Indonesian abattoirs and in feedlots to improve conditions. Producers' bodies, such as the NT Cattlemen's Association, have also embarked on goodwill projects. In May, the association hosted eight Indonesian animal husbandry students from two Javanese universities, and there are plans to send indigenous students to Indonesia as part of a skills sharing program.

On the Sturt Plateau, Tom Stockwell and his family run the Sunday Creek Station. He is passionate about his property and the industry, but like many he has a surplus of cattle and is worried about the future as the situation deteriorates.

The weight restrictions and the uncertain access to the Indonesian market over the past 12 months mean many cattle are now too heavy for Indonesia. Also, it is too costly to truck them to abattoirs in southern and eastern states, like Victoria.

Stockwell says there are small markets to the Middle East, the Philippines and Malaysia that ''sporadically'' become available.

''But it is very ad hoc when they come up. So there is now a fair bit of competition for spots on the boats.''

Stockwell's neighbour, Keith Holzwart, runs Avago Station, which takes in nearly 1600 square kilometres of the Sturt Plateau. He says the challenges facing the cattle trade affect not just producers, but the whole community.

In some communities producers are the main employers. There is a lucrative freighting, shipping and feedlot business all reliant on the trade.

''They [the government] didn't think about the local grocers, business, accountants and agents that lost business because of this,'' Holzwart says.

Australian cattle traders working in Australia and Indonesia believe Indonesia is unlikely to meet its self-sufficiency target of 90 per cent by 2014, or if it does, be able to sustain it because it will begin to eat into its local supply.

Dayan Antoni, a spokesman for Santori, one of Indonesia's biggest beef companies, says the country's push for self-sufficiency means that since local stock began replacing Australian imports, it accounts for about 83 per cent of the market.

But industry sources say local farmers are making up the shortfall by selling their breeding cows, taking advantage of high prices but undermining the long-term sustainability of the herd because 85 per cent of the local cattle slaughtered are fertile females.

''The private sector has been telling the government that there will be no constant growth to achieve self-sufficiency,'' Antoni says. ''If we meet the target in 2014, then by 2016-17 we will not be able to meet it.''

Across Indonesia, feedlot businesses are only running at half capacity, adding to the local beef shortage. While the push for self-sufficiency resonates with farmers, butchers and consumers are keener on Australian beef and because of the demand prices are rising. Gofur, a butcher at a market in Jakarta says: ''It is important to sell Australian beef; it is better quality and customers want it.''

This year's import quotas for Australia meet only 17 per cent of local demand. But Antoni says imports need to rise by another 30 per cent so that the local beef herd can expand.

Antoni, who is also spokesman for the feedlot industry association Apfindo, says the more prosperous Indonesians become, the more beef they buy. "When the economic and social status rises, they will buy a car, or a motorbike … a [mobile] phone, and consume beef. That's the status symbol."

Critics of live exports argue it would be better for Australia if cattle were slaughtered here for export because it would create jobs and reduce export costs. But many Indonesians prefer to buy their meat fresh from morning markets where it arrives direct from the abattoir.

The national dish, Bakso, a type of boiled beef meatball, is best made when the beef is fresh; when it is frozen, it absorbs more water.

In July, Indonesian President Susilo Bambang Yudhoyono and several of his senior ministers met the Australian government in Darwin and discussed cattle exports. Producers were left disappointed after Yudhoyono failed to increase Indonesia's cattle import quota.

But some Australian farmers are hopeful that after the Indonesian 2014 national election, the Indonesian government will realise maintaining self-sufficiency is not possible.

Meanwhile in Australia, cattle producers and associated business, such as road train drivers, who are reeling from the suspension and reduced quotas, have launched legal action against the federal government to win compensation.

The Age understands the Australian Government Solicitors Office is now reviewing the claims from the industry.

Despite the gloom hanging over the cattle trade, exporters, producers and animal welfare groups in Australia and Indonesia agree the welfare of the cattle has improved.

Dadang, the general manager of PT Agrisatwa feedlot in Subang, 140 kilometres from Jakarta, says the new tough rules are improving conditions for local cattle.

He says new traceability rules means traders can now track poorly treated cattle back to the source and refuse to buy from rogue farmers. Slaughtering techniques, including the proper use of stunning, have also been improved and accepted.

The woman who uncovered the cruelty to cattle in Indonesia, Animals Australia's Lyn White, applauds the Indonesian government for implementing new animal welfare standards but says there is still too much industry self-regulation there.

''Their track record fails to give us any confidence that this system will protect the welfare of animals. The fact that the one investigation that we conducted in Indonesia since ESCAS [new animal welfare standards] was implemented revealed 37 breaches of standards and indicates that animals remain at risk on a nightly basis,'' she says.

The group remains frustrated that Australian exporters are still willing to send cattle to Indonesian abattoirs that do not use pre-slaughter stunning, despite assurances that animal welfare is a priority.

''There is no doubt that a portion of exported animals is killed more humanely as a result of Animals Australia's investigation last year and the ensuing regulations forced on industry. However, the vast majority of exported animals are still killed while fully conscious and that will always involve unacceptable cruelty,'' White says.

Animals Australia says while new rules have helped improve cattle welfare, it says the system is not comprehensive because breeding cattle that are exported are not protected under the same rules. White says these cattle are now being killed.

Industry officials here say tracking cattle that are sold for breeding is much more difficult because of the longer life of the animals.

Both Animals Australia and the Greens have raised the issue with the federal government, with data revealing a quadrupling of breeder cattle exports to Indonesia recently.

White says while Animals Australia will continue its investigations into all of Australia's live animal export markets, she says an animal welfare charity should not have to become the watchdog for a multimillion dollar government-endorsed industry. ''But in the absence of government oversight, we will have to continue in this role.''

Alison Penfold, the chief executive of the Australian Livestock Exporters' Council, says the industry is concentrating on ensuring the relationship with Indonesia remains strong.

''Indonesia remains a critical market; we will continue to support their desire to meet self-sufficiency. We are making sure we are ready to take advantage of any opportunities that come in Indonesia,'' Penfold says.

Penfold says the Australian industry is working with several Indonesian groups to develop a policy about better welfare for breeder cattle.

Richard Willingham is regional affairs correspondent. He recently travelled to the Northern Territory and Indonesia as a guest of the Cattle Council of Australia and NT Cattlemen's Association.